Certain federal, state, and/or local agencies require merchants of certain products and/or services to report sales of those products or services to purchases. One intent of the reporting requirement is to ensure the safety of the acquiring party by monitoring how much and how often the acquiring party may be acquiring particular products or services. Another intent of the reporting requirement is to identify and track potentially fraudulent activity, either by the merchant or the acquiring party.
Under the reporting requirement, merchants submit information about their sales to the proper reporting entity in a batch format. As such, sales of products are reported after the sales have been completed, the acquiring party has received the product or service, and the acquiring party is no longer at the merchant's business location. In addition, for sales of certain products, merchants are required to access a third-party website to evaluate the purchase history of the acquiring party in order to make a determination as to whether the sale of the product to the acquiring party is permitted.
The conventional process has several drawbacks. First, since the reporting is done in batch format after the completion of the transaction, transactions that should not have been permitted are only determined after the fact. The product or service has already been provided to the acquiring party, who is unlikely to return it. Similarly, detection of potential fraud can only be determined long after the sale of the product is completed, which allows the fraud to continue during the additional lag time between the actual purchase and the evaluation of the batch sales data.
In addition, requiring merchants to break workflow and access a third-party website to review an acquiring party's purchase history has challenges as well. First, the model assumes that the website is always available. If the website is down the merchant may not be able to complete the transaction or may choose to complete the transaction without consultation of the website. Additionally, the evaluation of the website by the merchant (and more specifically employees of the merchant) leads to inconsistent decision-making based on the data provided on the website as each individual is likely to evaluate and process the information in different ways, leading to inconsistent decisions as to whether the purchase should be completed.